PRECIOUS-Gold gains amid concerns over trade war, Italy elections

Reuters Staff

3 Min Read

* Spot gold may rise to $1,332/oz - technicals
* Concerns persist over impact of Italy poll outcome on EU
(Updates prices)
By Eileen Soreng
March 5 (Reuters) - Gold prices rose on Monday as investors
opted for the safe-haven asset amid fears of a global trade war
and uncertainty surrounding the outcome of elections in Italy,
which could spell new concerns for the euro zone.
Spot gold rose 0.4 percent to $1,326.76 per ounce at
0756 GMT. Earlier in the session, it hit $1,327.86, the highest
since Feb. 27.
U.S. gold futures for April delivery rose 0.4
percent to $1,328.20 per ounce.
The dollar fell for a fourth straight session to trade
around 105.37 yen , but was slightly above Friday's low of
105.23, a level not seen since November 2016.
The U.S. currency slipped from its six-week high that it
touched on March 1, after U.S. President Donald Trump announced
plans to levy hefty tariffs on aluminium and steel imports
igniting fears of retaliation from its trade partners.
"Any escalation of trade wars will significantly dent the
U.S. dollar appeal, weigh negatively on U.S. assets such as bond
and equities and make gold the go-to hedge against rising U.S.
fiscal and political vulnerabilities," Stephen Innes, APAC
trading head at OANDA, said in a note.
A weaker dollar supports gold, making it cheaper for holders
of other currencies.
Asian investors dumped shares and drove to the safety of the
yen and gold amid fears of a global trade war and worries of
political uncertainty in Italy, risks that cloud the outlook for
world growth.
"I think gold prices are up partly because of the
uncertainty over the impact of the Italian election on the euro
zone," said Ji Ming, chief analyst, Shandong Gold Group.
Italian voters delivered a hung parliament on Sunday and
if early projections are confirmed, none of Italy's three main
groups will be able to rule alone and there is little prospect
of a return to mainstream, moderate government, giving the
European Union a new headache to deal with.
Investor appetite for a safe-haven asset such as gold rises
during times of geopolitical and financial uncertainty.
Spot gold could rise to $1,332 per ounce, as it has pierced
above a resistance at $1,325, according to Reuters technical
analyst Wang Tao.
In other precious metals, silver rose 0.4 percent to
$16.55 per ounce.
Platinum inched up 0.1 percent to $963.24 per ounce,
while palladium gained 0.4 percent to $966.40.
(Reporting by Eileen Soreng in Bengaluru, Editing by Sherry
Jacob-Phillips and Biju Dwarakanath)